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YC 14: Disregarding concessionary rules
or “When special rules help a company meet continuity requirements”
You could also call this:

“Directors' responsibility when company ownership changes affect rule compliance”

This law is about what happens when a company’s directors know about changes in who owns the company. These changes might break some rules, but there are special exceptions that can help the company follow the rules.

You need to know about this law if two things are true:

  1. The company only follows the rules because of some special exceptions called YC 10 or YC 11.

  2. The only reason the company needed these exceptions was because of normal business activities. These activities include:

    • People buying and selling small amounts of shares on the stock market
    • Cancelling some units in a trust that lots of people own
    • Moving small amounts of shares between people who don’t own much of the company
    • The company giving out, buying back, or cancelling a small number of its own shares

If the directors know, or should know, that the company only follows the rules because of these exceptions, then the law says the company actually doesn’t follow the rules.

The law also explains that a “less than 10% holder” is someone who owns such a small part of the company that they get special treatment under section YC 10.

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Next up: YC 16: Disregarding market value changes

or “Ignoring changes in company value for certain rules”
Next

Part Y Definitions and related matters
Measurement of company ownership

YC 15Directors’ knowledge of failure to meet requirements of continuity provision

  1. This section applies if—

  2. for a company at a time, the requirements of a continuity provision would not have been met but for the application of section YC 10, YC 11, or both; and
    1. the failure, but for that concessionary application, to meet the requirements would have occurred in the absence of transactions of the following types:
      1. the sale of shares in a company in the ordinary course of trading on a recognised exchange between less than 10% holders:
        1. the cancellation of shares in a unit trust, that falls within paragraph (a), (b), or (c) of the definition of widely-held trust, held by less than 10% holders:
          1. the cancellation of shares in a unit trust, that falls within paragraph (a), (b), or (c) of the definition of widely-held trust, which were acquired from less than 10% holders by the manager or trustee of the unit trust in the ordinary course of their activities in relation to the unit trust:
            1. the transfer of shares in a company other than in the ordinary course of trading on a recognised exchange between persons, each of which is not a company associated with the company and has a direct voting interest or direct market value interest of less than 5%, calculated before the application of section YC 4 as modified by section YC 11:
              1. the issue, redemption, or cancellation by a company, or the transfer to or from the company, or the transfer to an employee of the company from a trustee of a trust with no beneficiary other than the company and the company's employees, of shares in the company, or options over shares in the company, that in total for the company's income year would be a direct voting interest or direct market value interest of less than 5% if held by a single person; and
              2. the directors of the company know or could reasonably be expected to know, without making enquiries specifically for the purposes of applying the continuity provisions, that the requirements of the continuity provision would not have been met but for that concessionary application.

                1. The requirements of the continuity provision are treated as not met at the time.

                2. In this section, less than 10% holder means a person whose direct voting interest or direct market value interest is, at all relevant times, an interest to which section YC 10 applies.

                Compare
                Notes
                • Section YC 15(1)(b): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 133(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                • Section YC 15(1)(b)(iii): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 133(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                • Section YC 15(1)(b)(iv): added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 133(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                • Section YC 15(1)(b)(iv): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 133(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                • Section YC 15(1)(b)(v): added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 133(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                • Section YC 15(1)(b)(v): substituted (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 133(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).